The Markit iTraxx Europe Index of credit-default swaps on
125 companies with investment-grade ratings dropped 1.5 basis
points to 91, the lowest since May 2010.

The RBA cut its benchmark rate to a record low of 2.75
percent today to bolster an economy that’s been weakened by the
strong Aussie dollar. After the ECB cut its benchmark rate to an
all-time low last week, President Mario Draghi said yesterday
that further interest-rate cuts are possible. The latest
stimulus compounds a global credit rally fueled last month by
the Bank of Japan’s plan to buy more than 7 trillion yen ($70.6
billion) of bonds a month.

“Rate cuts from the ECB and now the RBA point to a
continuation of flows into credit for now, and many investors
holding short index positions have been forced to capitulate,
keeping spreads grinding tighter,” said Joseph Faith, a credit
strategist at Citigroup Inc. in London. “Despite deteriorating
economic fundamentals in Europe, the Bank of Japan’s massive
asset purchase plan is adding liquidity to the market whilst
restricting the supply of other assets to buy.”

Hutchison Whampoa Ltd. (13) plans to sell euro-denominated
hybrid bonds in its first issuance of securities in the currency
in a year, according to a person familiar with the deal. The
securities for the Hong Kong-based company controlled by
billionaire Li Ka-shing combine features of debt and equity and
will be callable after five years.

The notes are being issued through Hutchison Whampoa Europe
Finance (13) Ltd.

The Markit iTraxx Financial Index linked to senior debt of
25 banks and insurers was little changed at 131.5 basis points,
and the subordinated index declined one basis point to 213.

A basis point on a credit-default swap protecting 10
million euros ($13.1 million) of debt from default for five
years is equivalent to 1,000 euros a year. Swaps pay the buyer
face value in exchange for the underlying securities or the cash
equivalent should a borrower fail to adhere to its debt
agreements.